SBA Hotel Loans

Small Business Loans

City Capital Realty offers mortgage financing for real estate under the government’s SBA loan program. These SBA loan programs can be used for properties which have greater than 50 percent owner occupancy, or are owner-managed such as a motel. SBA loans can be highly advantageous, and City Capital Realty has the resources required to guide you through this process.
Our SBA loan financing allows for both purchase and refinance capital, and can provide a range of flexible options to support future working capital needs.

The SBA 504 loan is a popular method of financing the acquisition or construction of hotels around the country. It requires as little as 15 percent borrower equity, provides up to a 20 year fixed interest rate, and insulates the primary lender from virtually all credit risk. Following is a general description of the program, its benefits and requirements, and how you can apply for a 504 loan.

Eligible Applicants - Small Business Loans Requirements

Business must meet SBA size standard for small business.

Business must be for profit, show good character, credit, management, and ability to repay.

Borrower must occupy at least 51% of real estate purchased or refinanced.

Borrower must be legal alien / U.S. citizen.

If start up or acquisition, borrower will be required to contribute at least 10% of the start up capital

SBA-504

If buying your own building is desirable, one of the SBA’s flagship programs called the SBA-504 loan can help you achieve your goal. CDC is provider of SBA-504 loans. Our loans are designed to help small businesses buy, construct or improve commercial and industrial buildings as well as buy and install heavy machinery and equipment.

Advantages of a SBA-504

Long-term, fixed rate. 504 loans have a 20-year fixed rate term on real estate and a 10-year fixed rate term for equipment

Below-market interest rates

Low down payment retains capital in the business. Conventional bank loans require a 35% down payment. The SBA-504 Loan has a down payment minimum of 10% – allowing your business to retain the additional 10% for working capital

(Down payment is 15% for start up businesses)

No balloon payments

The 504 loan is government guaranteed. Therefore, the collateral required is normally the property being purchased; no additional collateral needed.

Closing costs such as appraisal fee, environmental fees, contingency fees can be included in the financing

Projected income consideration – CDC can consider projected income of a business in addition to historical cash flows. This is particularly advantageous for growing businesses

Structure of Loan

A SBA-504 loan has three participants:

Bank – provides a first trust deed loan for at least 50% of the total project cost.

CDC – provides SBA-guaranteed 504 loan for up to 40% of the total project cost, or a maximum of $5 million ($5.5 million for manufacturing businesses and “green” buildings)

Small Business Owner – contributes a down payment of at least 10% (15% for start-up businesses or single purpose properties)

To qualify, the business must:

Be organized for-profit

Be organized as a sole proprietorship, corporation, partnership or limited-liability corporation (LLC)

Have tangible net worth no greater than $15 million and average net profit after taxes below $5 million in the last two operating year